Gujral Doctrine On Global Ageing Has Many Takers In EU Meet

Former Prime Minister IK Gujral scored a palpable hit here earlier this week (March 4), with his unconventional approach to the problem of global ageing, and his call for a North-South Summit on this issue.

The conventional approach to the problem was neatly summed up in the two-day conference: The economic and budgetary implications of global ageing. In other words, where will the money to pay pensions come from if the number of persons of working age for every old age pensioner drops from 4 to just 2, as is forecast for the 15-nation European Union (EU)

Failure on the part of the EU states to meet the budgetary consequences of ageing populations would lead to unsustainable public finances, according to the head of economic and monetary affairs in the EU, Commissioner Pedro Solbes. As a matter of fact, there already exists a clear and unequivocal risk of unsustainable public finances in at least half of the EU countries, Mr Solbes said in his opening address.

For both the former Prime Minister and the EUs economic commissioner the short answer to the problems of ageing societies is faster economic growth. Mr Solbes pointed out that the EUs political leaders have already agreed that EU must become the most competitive, knowledge-based economy in the world by 2010. To this end, European labour markets in particular have been singled out as essential for raising growth potential, he noted.

Taking the floor shortly after Mr Solbes, Mr Gujral maintained that the profound challenge of global ageing will not be solved within the individual means of any single country or region. In short, the resources of the world as a whole would have to be marshalled to address the challenges that lie ahead. Mr Gujral pointed to a basic flaw in the report that a panel of the Washington-based Centre for Strategic and International Studies (CSIS) had prepared for the conference which, incidentally, it co-sponsored with Mr Solbes and the European Commission, the EUs executive arm.

For Mr Gujral, the research on which the report was based seemed excessively focused on the micro-elements of the ageing phenomenon, such as the short-term measures required to improve the solvency of the pension and welfare liabilities of the ageing industrial world.

He found it necessary, therefore, to focus on the big picture, on the fundamental issue of how can the world economy in aggregate grow faster, how can it enhance improvements in productivity, innovation and technology, in order to maintain and possibly enhance the historical growth rate of the world economy For Mr Gujral, in other words, global macroeconomic gains can be expected to provide the favourable environment needed to make the necessary microeconomic adjustments.

Former freedom fighter of India was not content with challenging the Eurocentric approach of Mr Solbes. The latter had stressed the need to reconsider our approach to working lives. It was hardly sensible for people to abruptly retire aged between 55 and 65, only to be economically inactive for the last 20 or 30 years of their lives, most of which will be spent in good health.

Mr Gujral thought the very word ageing was a misnomer, for it tends to convey the impression of a civilised, leisure-oriented and benign existence of ever-increasing human longevity. The real issue was that of depopulation, the growing imbalance between the elderly and the young. Hence the need for North-South co-operation in at least three areas, in order to ensure that the younger manpower and other resources of the West are most profitably deployed.

Firstly, there is the unresolved issue of liberalising world trade in agriculture, which is grossly distorted at present by the indiscriminate support provided to domestic agriculture by developed countries such as Japan, the US and, more particularly, the EU. The elimination of agricultural subsidies need not destroy local agriculture but orient it to more specialised and value added uses, as the example of Australia and New Zealand shows. Mr Gujral urged the EU to view the issue in a wider context, and pursue the overdue agricultural reform speedily.

Secondly, there are the opportunities for North-South co-operation in technology.

Mr Gujral took the example of business process outsourcing (BPO). The interesting feature of the Indian BPO industry is that the average age of the 250,000 Indians who work today in this industry is just 27 years, he said. Modern technology had made it possible for young graduates to join the global labour force without having to step far from their homes. Both India and Western firms had benefited from the process.

Mr Gujral noted that according to the CSIS panels report the depopulation problems of countries such as Germany and Japan are already so severe that it would require the influx of millions of immigrants annually just to maintain the existing age structure of the German population.

While the physical movement of people in such large numbers would obviously be socially disruptive, the Internet posed no evident limitations on the number of virtual workers who can be enlisted in the value creation networks of the digital workplace. The threat of the hollowing out of Western enterprises was unlikely to be realised, given that only non-core functions tend to be out-sourced.

The former Prime Minister maintained that North-South interdependence had the potential to promote global peace and stability. He dismissed fears of a possible adversarial relationship between the industrialised West and the emerging economies of China and India, as suggested in the CSIS panel report. For Mr Gujral, it is a truism perhaps that nations which trade and invest in each other do not, whatever their differences may be, end up in violent conflict. On the contrary, progressive North-South economic integration would be an indispensable contribution to a global environment of peace, security and well-being.

Mr Gujral saw in an interdependent, global economic community a durable guarantee for peace. Any North-South dialogue on global ageing would need to address a number of concerns, however.

They include the liberalising and levelling of the global trade and investment playing fields, according to Mr Gujral. In other words, North-South cooperation requires the removal of inequities under the present regime, notably protectionism. A joint effort, supported by the industrialised countries, was needed to spread the benefits of education, technical training and human development in all developing countries.

Mr Gujral was confident that his words had not fallen on deaf ears. After all, he had stressed the need for North-South cooperation as a means of dealing with the problem of global ageing at the Global Ageing Conference held in Switzerland two years ago. The CSIS panel that had drafted the present report is planning to meet in India.

The European Commissioner for economic and monetary affairs, Pedro Solbes, had no doubt dealt with the problem of global ageing from an essentially European viewpoint.

However, his colleague Pascal Lamy, the Commissioner for external trade, has stressed the need to ensure that the Doha Development round of trade negotiations meets the development needs of the developing countries. This would go a long ways towards ensuring the North-South economic cooperation which Mr IK Gujral sees as the only effective answer to the challenge of global ageing.